San Diego developers offer TVs, other incentives to sell condos

SAN DIEGO - The hip Atria condos have a lot to offer young professionals and empty-nesters - a prime downtown address, skyline views, gym, rooftop deck and units starting at $300,000.

Developers are even offering free plasma TVs and $5,000 home renovation gift certificates to lure skittish buyers in what had been one of the nation's hottest real estate markets.

With sales stalled by a spreading slowdown, incentives are on the rise in San Diego and other big cities that saw explosive condo construction during the boom.

But in real estate, as in dating, signs of desperation can be counterproductive. Many prospective buyers are shrugging off the enticements.

"We can wait a while and try to get the most for our money," said Andy Albert, an empty-nester who recently sold his home in a suburban beach community - after knocking 10 percent off the asking price.

Like many would-be buyers, Albert and his wife intend to rent an apartment near his downtown law office while they keep looking for the best possible deal.

San Diego County was at the forefront of the national housing boom that began five years ago. But in June, it became the first major California real estate market to see its annual median price for houses and condos slide since the run-up began.

The figure dropped 1 percent to $488,000, according to DataQuick Information Systems, a real estate tracking firm based in La Jolla. Meanwhile, sales dipped 24 percent due in part to a sharp decline in demand for condos in the newly redeveloped downtown core.

"The only people who are buying right now are the people who really need to," said Peter Dennehy of the Sullivan Group Real Estate Advisors, a San Diego consulting firm.

"There are a lot of people waiting on the sidelines, because they're under the perception that they'll get a big deal if they hold off," he said.

Once high-flying condo markets around the nation have been bogged down by sagging demand and rising interest rates. Areas of California, Nevada and Arizona have been particularly hard hit, analysts said.

In Carson City, condo projects have just started, and so far buyers are interested.

A nationwide residential developer plans to construct 48 town houses in Carson City on South Roop Street.

Centex Homes purchased 3.78 vacant acres south of the post office on Roop Street for $2.6 million, to build town homes. The company bought the property on Feb. 3 from Dayton-based Toscana Village LLC. Governor's Square, the builder's first project in Carson City, is under construction.

Parkway Manor, in northeast Carson City, is set to become the city's first condominium conversion. The 176-unit apartment complex is expected to retain about 25 percent of its renters as new condo owners, said Ryan Langson, vice president of Langson Development.

Before the conversion is approved, the five-year-old complex has to make several renovations to bring it up to current code. Renovations have to be done to all the stairs. Fire stops must also be added between units.

"It's still doable and we're preceding forward," Langson said. "Upgrades of the units are being finalized and once we have upgrade pricing we can set initial prices for the units."

In Las Vegas, at least three major condo projects backed by high-wattage investors such as George Clooney, Michael Jordan and Ivana Trump have been put on hold. Developers have also deep-sixed major complexes in Philadelphia and Miami-Dade County in Florida.

In California, the condo slowdown has been particularly pronounced in San Diego and the Central Valley, where rapid urbanization attracted a number of investors who are now rethinking their strategies, according to Michael Carliner, an economist with the National Association of Home Builders.

In San Diego County, a total of 1,794 new condos went into escrow in the first half of the year - a third less than in the first half of 2005, according to MarketPointe Realty Advisors.

"Buyers downtown are people who can choose between San Diego and other places," said Gary London, president of the London Group, a San Diego real estate consulting firm.

"This is the first time we've experienced a housing recession where the oversupply is in urban units rather than single-family homes," he said.

And a raft of new projects are currently under construction, threatening to exacerbate the problem. The city's Centre City Development Corp. estimated 3,562 new condo units in 34 projects were in the works in July.

Any unsold units could be turned into rentals by developers, Carliner said.

To help jump-start sales, condo developers throughout the county are turning to financial incentives and street-side gimmicks.

One complex that bills itself as a resort-style community just north of downtown is advertising $35,000 discounts on units already tricked out with state-of-the-art, stainless steel appliances.

Developer Maisel Presley is selling condos online by dropping the price by $1,000 a day until a unit sells. A new development in upscale La Jolla is dangling zero money down programs to lure buyers.

On a recent Sunday afternoon, a prime time for condo shoppers, two real estate agents sat alone in the Atria sales office. Outside, bright green sandwich boards peppered the sidewalk and a woman twirled a large arrow to grab the attention of passing drivers.

About half the 150 units have sold since developers converted the building from apartments to condos last year, said Ed Easley, president of Crown Pacific Properties, which manages the building.

"We're in a market that requires incentives, and just about everybody has got some sort of a program for their buyers," he said.

• Appeal staff writer Becky Bosshart contributed to this report.